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Overview of the New 6-Week T-Bill

Feb 16, 2025

Lecture Notes: Introduction to the New 6-Week T-Bill

Introduction

  • The Treasury is holding its first auction for the new 6-week T-Bill (formerly the 42-day or 6-week Cash Management Bill - CNB).
  • The lecture covers:
    1. Differences between T-Bills and CNBs.
    2. Important details about the new 6-week T-Bill.
    3. Purchasing options and expected yield.

Differences Between T-Bills and CNBs

  1. Auction Schedule

    • CNBs do not follow a regular auction schedule; they are issued flexibly to meet cash requirements.
    • T-Bills have a strict, pre-planned auction schedule.
    • The 6-week T-Bill will appear on the tentative auction schedule updated quarterly by the Treasury.

  2. Terms and Maturities

    • CNBs have varied terms (from 3 to 154 days).
    • T-Bills have pre-defined terms (4, 8, 13, 17, 26, 52 weeks, and now 6 weeks).

  3. Purchase Locations

    • CNBs can only be bought through select brokers (e.g., Fidelity, E*TRADE) and not through TreasuryDirect.
    • T-Bills can be purchased via multiple platforms including TreasuryDirect, Fidelity, E*TRADE, Schwab, Vanguard.

Details About the New 6-Week T-Bill

  • Essentially a reincarnation of the 42-day CNB.
  • Regularly included in the weekly auction schedule from June 2023.
  • Strong demand from money market funds, institutional investors, and retail buyers.
  • Transition to benchmark status announced in May 2024.
  • Auction and settlement dates remain the same as the 42-day CNB.

Purchasing the 6-Week T-Bill

  • Available on Fidelity, Vanguard, and E*TRADE.
  • Not yet listed on Schwab.
  • Can also be purchased on TreasuryDirect where auto-roll features are available.
  • Auto roll not initially available on platforms like Fidelity, similar to the 17-week T-Bill.

Expected Yield

  • The yield is expected to fluctuate before the actual auction date.
  • At the time of taping, Fidelity provides information on expected yield.

Additional Information and Resources

  • Auto roll is possible on TreasuryDirect.
  • Common issues with TreasuryDirect's back button noted by users.
  • Live member Q&A scheduled for deeper insights into other T-note auctions.

Conclusion

  • The 6-week T-Bill offers a new investment opportunity with the flexibility and structured schedule similar to traditional T-Bills.
  • Check out additional resources and courses for more in-depth learning about bonds and stable income streams.

Upcoming Sessions

  • Live Q&A session on February 23rd at 5 PM ET / 2 PM PT focusing on 2, 5, and 7-year T-note auctions.

Note

  • For more details, refer to the video linked below for clarification and learning enhancement.

Full transcript